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Credit and debit card surcharges are set to be banned in UK and EU. Is your company able to absorb the cost of card processing?

What will happen?

Consumers will no longer to be charged extra for paying a low amount by debit or credit card, the government has said. From January 2018, businesses will no longer be able to add any surcharges for card payments.

It follows a directive from the European Union, which bans surcharges on Visa and MasterCard payments. However, the government has gone further than this, banning similar charges on American Express and PayPal.

Campaigners welcomed the move as great news for consumers. However, this will have serious implications for businesses that already have slim margins on processing costs.

Geoff Leech, Head of merchant partner development at Fibonatix UK explains:

“In what is an increasingly cashless society, this development is going to significantly affect thousands of businesses, whose customers now expect the convenience of paying for goods and services by credit or debit card.

Merchants are going to face a difficult choice between raising prices or having to absorb card processing costs to their detriment.”

Processing costs, when scaled, make up significant expenses for businesses. This new directive will therefore add costs to many companies’ overheads. There is a very real need to streamline card payment processes and reduce costs to compensate for this incoming legislation.

Who will be hit the hardest?

There are a range of companies that will be hit by this legislation, but if you are an SME processing less than £100k of business a month, you will be hit particularly hard. At this payment threshold, it’s likely your company does not have the resources of Google or other corporate giants. Fluctuations in card processing payments will therefore have a greater impact upon your business.

The change in the law means that businesses and especially SMEs will either have to raise prices to cover card payment costs, or absorb the costs themselves. This puts them in a lose-lose scenario. In many cases, costs will be passed directly to the consumer, risking negative fightback from customers.

Nobody likes having to pay more for something, and the excuse “it’s not us, it’s the banks” does little to convince the public otherwise.

The other option for SMEs is to simply absorb the processing fees, becoming less profitable as a result. If this business is your livelihood, or you have a small team of employees to support, dropping profits can directly impact people’s lives.

How can we help?

So, what is the alternative to smaller profits or disgruntled consumers? This is where Fibonatix can help.

The announcement today banning card processing surcharges has been expected for some time. This was a key driver in Fibonatix developing a flexible online and in-store card processing service, which ensures merchants pay the most competitive processing costs possible. Our expertise lies in providing the perfect solution for merchants who accept card payments both online and in-store.

If you decide to work with Fibonatix, we will quickly arrange a meeting to assess your payment volumes and create a flexible service plan that will enable you to absorb processing costs without impacting your profit margins. All this without any contract fees.

Our aim is to help clients provide all payment options to their customers, remaining highly competitive without losing out themselves.

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